INTRODUCTION

India's retailing industry was essentially owner manned small shops. In 2010, larger
format convenience stores and supermarkets accounted for about 4 percent of the
industry, and these were present only in large urban centers. India's retail and logistics
industry employs about 40 million Indians (3.3% of Indian population). In November
2011, India's central government announced retail reforms for both multi-brand stores
and single-brand stores. These market reforms paved the way for retail innovation and
competition with multi-brand retailers such as Walmart, Carrefour and Tesco, as well
single brand majors such as IKEA, Nike, and Apple. The announcement sparked
intense activism, both in opposition and in support of the reforms. In December 2011,
under pressure from the opposition, Indian government placed the retail reforms on
hold till it reaches a consensus. In January 2012, India approved reforms for singlebrand stores welcoming anyone in the world to innovate in Indian retail market with
100% ownership, but imposed the requirement that the single brand retailer source 30
percent of its goods from India. Indian government continues the hold on retail
reforms for multi-brand stores.
Retailing in India is one of the pillars of its economy and accounts for 14 to 15
percent of its GDP. The Indian retail market is estimated to be US$ 500 billion and
one of the top five retail markets in the world by economic value. India is one of the
fastest growing retail markets in the world, with 1.2 billion people.

GROWTH OF RETAIL INDUSTRY

Between 2000 to 2010, Indian retail attracted about $1.8 billion in foreign direct
investment, representing a very small 1.5% of total investment flow into India. Single
brand retailing attracted 94 proposals between 2006 and 2010, of which 57 were
approved and implemented. Indian retail has experienced limited growth, and its
spoilage of food harvest is amongst the highest in the world, because of very limited
integrated cold-chain and other infrastructure. India has only 5386 stand-alone cold
storages, having a total capacity of 23.6 million metric tons. However, 80 percent of
this storage is used only for potatoes. The remaining infrastructure capacity is less
than 1% of the annual farm output of India, and grossly inadequate during peak
harvest seasons. This leads to about 30% losses in certain perishable agricultural
output in India, on average, every year. The organized retail market is growing at 35
percent annually while growth of unorganized retail sector is pegged at 6 percent in
2007. As of 2008, several Indian was planning rapid change with investments to the
tune of US$25 billion and multinational companies in the next 5 years. It is a huge
industry in terms of size and according to India Brand Equity Foundation (IBEF), it is
valued at about US$395.96 billion. Organized retail is expected to garner about 16-18
percent of the total retail market (US$6575 billion) in the next 5 years.

MARKET SIZE
The Indian retail MARKET, currently estimated at around US$ 490 billion, is project
to grow at a compound annual growth rate (CAGR) of 6 per cent to reach US$ 865
billion by 2023. Food and grocery is the largest category within the retail sector with
60 per cent share followed by the apparel and mobile segment.

Organized retail, which constituted seven per cent of total retail in 201112 is
estimated to grow at a CAGR of 24 per cent and attain 10.2 per cent share of total
retail by 201617, according to a study titled 'FDI in Retail: Advantage Farmers'
conducted by an industrial body.
India has about one million online retailers small and large which sell their
products through various e-commerce portals. The online retail industry in the country
touched US$ 12.6 billion in 2013, according to a recent report by the Internet and
Mobile Association of India (IAMAI).

INVESTMENTS
The foreign direct investment (FDI) inflows in single-brand retail TRADING during
the period April 2000 March 2014 stood at US$ 106.66 million, as per data released
by Department of Industrial Policy and Promotion (DIPP).
The Indian online retail industry is on the rise and has attracted a cumulative
FUNDING of US$ 1,650.5 million since 2009. Out of the total funding, 65 per cent
has gone to horizontals and 25 per cent to fashion & apparels including jewellery.
Flipkart & Myntra, who are now a single entity (though they will operate differently),
have together garnered 40 per cent of the total funding invested in Indian e-commerce
so far, according to Juxt Data.
The following are the key INVESTMENTS and developments in the Indian retail
industry:
Marks and Spencer (M&S) plans to go up to 100 outlets in India within the next two
years following a 13 per cent growth in their sales in the Indian market.
Flipkart.com has recently acquired fashion e-retailer Myntra.com for a sum of around
US$ 3 billion. This deal will help Flipkart garner a larger market share in the ecommerce segment.
Metro AG plans to increase the number of its wholesale stores in India from 16 to 50
by 2020 and make the country one of its focus expansion markets.
Reliance Industries plans to open 2,000 exclusive outlets, Digital Xpress Mini, in FY
15 to sell the company's telecom services, smartphones, tablets and also accessories of
other brands.
Private equity (PE) firm Texas Pacific Group (TPG) Growth and India's Smile Group
will jointly INVEST US$ 100 million to help internet and e-commerce companies
build and scale their businesses across the AsiaPacific region and West Asia.
Ilex-London plans to invest around Rs 5 crore (US$ 843,397.17) over the next five
years to open 10 exclusive stores in India. Stores will have an average size of 500
600 square feet (sq. ft.), with an INVESTMENT of around Rs 5 million (US$
84,332.95) per store.
Government Initiatives
The Government of India has allowed 100 per cent FDI in Single-Brand Retail
Trading (SBRT) and has allowed 51 per cent FDI in Multi-Brand Retail Trading
(MBRT). Just recently, the Competition Commission of India (CCI) approved the
proposal of Tesco buying 50 per cent equity in Trent, which is the first-ever FDI
proposal in multi-brand retail TRADE.
According to the extant policy, foreign retailers investing more than 51 per cent can
open outlets across the country on the condition that 30 per cent of their sourced sales
would come from small to medium-sized domestic enterprises. Further, global chains
will now need to invest only 50 per cent of the initial compulsory investment of US$
100 million in setting up cold storages and warehouses in India.

The Confederation of All India Traders (CAIT) has signed a Memorandum of

Understanding (MOU) with eBay to train domestic retailers to use the online
MARKET space as an additional tool for expanding their business. The agreement
will enable Indian traders to export via eBay to 201 countries and sell at 4,306 Indian
locations.

ROAD AHEAD
India remains a largely untapped and unorganized retail MARKET, with several
international retail companies yet to commence operations in the country. India holds
a substantial advantage over other emerging retail destinations owing to its strong
domestic consumption and low rate of market penetration by overseas retailers.
India's new middle class is increasingly becoming brand conscious and willing to
spend on quality goods, a trend which is creating numerous business opportunities for
mid-range international brands. With political and economic sentiments already
showing signs of improvement, we believe this is the right time for international
retailers to look at India for expansion into the region," as per Mr. Anshuman
Magazine, Chairman and Managing Director, CB Richard Ellis (CBRE), South Asia.
E-commerce is also expected to be the next major area for retail growth in India. Ecommerce companies are increasingly going beyond digital marketing and targeting
offline customers as well. With this growth in the e-commerce industry, online retail is
estimated to reach US$ 70 billion by 2020 from US$ 0.6 billion in 2011.
The opportunities in food and grocery retail are immense, given that it constitutes
about 69 per cent of the countrys total retail market, according to panel members at
the seventh Food and Grocery Forum India. Retail in India - The Future
According to a study the size of the Indian Retail MARKET is currently estimated at
Rs. 704 Crores which accounts for a meager 3 % of the total retail market. As the
market becomes more and more organized the Indian retail industry will gain greater
worth. The Retail sector in the small towns and cities will increase by 50 to 60 %
pertaining to easy and inexpensive availability of land and demand among consumers.
Growth in India Real estate sector is also complementing the Retail sector and thus it
becomes a strong feature for the future trend. Over a period of next 4 years there will
be a retail space demand of 40 million sq. ft. However with growing real estate sector
space constraint will not be there to meet this demand. The growth in the retail sector
is also caused by the development of retail specific properties like malls and
multiplexes.
According to a report, from the year 2003 to 2008 the retail sales are growing at a rate
of 8.3% per annum. With this the organized retail, which currently has only 3% of the
total MARKET share, will acquire 15-20 % of the market share by the year 2010.
Factors that are playing a role in fuelling the bright future of the Indian Retail are as
follows:
The income of an average Indian is increasing and thus there is a proportional
increase in the purchasing power.
The infrastructure is improving greatly in all regions is benefiting the MARKET.
Indian economy and its policies are also becoming more and more liberal making way
for a wide range of companies to enter Indian market.

Indian population has learnt to become a good consumer and all national and
international brands are benefiting with this new awareness.
Another great factor is the Internet revolution, which is allowing foreign brands to
understand Indian consumers and influence them before entering the market. Due to
the reach of media in the remotest of the MARKETS, consumers are now aware of the
global products and it helps brands to build themselves faster in a new region

CHALLENGES
A McKinsey study claims retail productivity in India is very low compared to
international peer measures. For example, the labor productivity in Indian retail was
just 6% of the labor productivity in United States in 2010. India's labor productivity in
food retailing is about 5% compared to Brazil's 14%; while India's labor productivity
in non-food retailing is about 8% compared to Poland's 25%.
Total retail employment in India, both organized and unorganized, account for about
6% of Indian labor work force currently - most of which is unorganized. This about a
third of levels in United States and Europe; and about half of levels in other emerging
economies. A complete expansion of retail sector to levels and productivity similar to
other emerging economies and developed economies such as the United States would
create over 50 million jobs in India. Training and development of labor and
management for higher retail productivity is expected to be a challenge.

ORGANIZED Vs. UNORGANIZED SECTORS

The Indian retail industry is divided into organized and unorganized sectors. The
Indian retail sector is highly fragmented, with a major share of its business is being
run by unorganized retailers like the traditional family run stores and corner stores.
The organized retail however is at a very nascent stage, though attempts are being
made to increase its proportion bringing in a huge opportunity for prospective new
players.

UNORGANIZED RETAIL SECTOR

Indian retail is dominated by a large number of small retailers consisting of the local
kirana shops, owner-manned general stores, chemists, footwear shops, apparel shops,
paan and beedi (local betel leaf and tobacco) shops, hand-cart hawkers, pavement
vendors, etc. which together make up the so-called "unorganized retail" or traditional
retail. The last few years have witnessed the entry of a number of organized retailers
opening stores in various modern formats in metros and other important cities.
Unorganized retailers normally do not pay taxes and most of them are not even
registered for sales tax, VAT, or income tax.

ORGANIZED RETAIL SECTOR

Organized retailing refers to TRADING activities undertaken by licensed retailers,
that is, those who are registered for sales tax, income tax, etc. These include the

corporate-backed hypermarkets and retail chains, and also the privately owned large
retail businesses.
According to AT Kearney report for the year 2011,Organised retail accounts for 7 per
cent of India's roughly US$ 435 billion retail MARKET and is expected to reach 20
per cent by 2020.Food accounts for 70 per cent of Indian retail, but it remains underpenetrated by organized retail. Organized retail has a 31 per cent share in clothing and
apparel and continues to see growth in this sector. The home segment shows promise,
growing 20 to 30 per cent per year. Indias more urban consumer mindset means this
sector is poised for growth.

OPPORTUNITIES
For manufacturers and service providers the emerging opportunities in urban Markets
seem to lie in capturing and delivering better value to the customers through retail.
For instance, in Chennai CavinKares Lime Lite, Maricos Kaya Skin Clinic and
Apollo Hospitals Apollo Pharmacies are examples, to name a few, where
manufacturers/service providers combine their own manufactured products and
services with those of others to generate value hitherto unknown. The last mile
connect seems to be increasingly lively and experiential. Also, manufacturers and
service providers face exploding rural Markets yet only marginally tapped due to
difficulties in rural retailing. Only innovative concepts and models may survive the
test of time and investments. However, manufacturers and service providers will also
increasingly face a host of specialist retailers, who are characterized by use of modern
management techniques, backed with seemingly unlimited financial resources.
Organized retail appears inevitable.

CONCLUSION
The retail sector has played a phenomenal role throughout the world in increasing
productivity of consumer goods and services. It is also the second largest industry
in US in terms of numbers of employees and establishments. There is no denying
the fact that most of the developed economies are very much relying on their
retail sector as a locomotive of growth. The India Retail Industry is the largest
among all the industries, accounting for over 10 per cent of the countrys GDP
and around 8 per cent of the employment. The Retail Industry in India has come
forth as one of the most dynamic and fast paced industries with several players
entering the market But all of them have not yet tasted success because of the
heavy initial investments that are required to break even with other companies
and compete with them. The India Retail Industry is gradually inching its way
towards becoming the next boom industry.

REFRENCES

http://www.fibre2fashion.com/industry-article/free-retail-industryarticle/indian-retail-industry-its-growth-challenges-and-opportunities/indianretail-industry-its-growth-challenges-and-opportunities7.asp.
http://www.ibef.org/industry/retail-india.aspx
http://www.rai.net.in/EY-RAI_Pulse_of_Indian_retail_market_Final.pdf
http://business.mapsofindia.com/sectors/retail.html
http://www.equitymaster.com/research-it/sector-info/retail/Retailing-SectorAnalysis-Report.asp
http://economictimes.indiatimes.com/topic/indian-retail-sector
http://www.indiaretailing.com/delegateregistration/irf/irf_registration_2014.as
px?gclid=CInL0Yv4gcACFdgRvQodzikA_w
http://indianexpress.com/article/business/companies/retail-sector-in-india-tojump-five-fold-to-200-bn-says-boston-consultancy-group/
http://www.legalindia.in/foreign-direct-investment-in-indian-retail-sector-an-analysis/
http://www.indiaretailing.com